EUR/GBP loses ground around 0.8700 ahead of the German GDP data

The EUR/GBP cross extends its downside during the early European session on Friday. The downtick of the cross is backed by the upbeat UK PMI data. Investors will take more cues from the German growth numbers for the third quarter and the IFO Survey for fresh impetus. The quarterly and annual German GDP for Q3 is expected to remain at -0.1% and -0.3%, respectively. At press time, the cross is trading at 0.8697, down 0.04% for the day.

On Thursday, the Eurozone Manufacturing Purchasing Managers Index (PMI) climbed to 43.8 in November, compared with the estimation of 43.4 and above the previous reading of 43.1. This figure registered the highest in six months. Meanwhile, the bloc’s Services PMI hit a two-month high, climbing to 48.2 versus 47.8. prior. However, the market players believe November's PMI data did not indicate that eurozone GDP growth would improve in the fourth quarter and the region may have entered a technical recession in 2023. This, in turn, exerts some selling pressure on the Euro (EUR) and acts as a headwind for EUR/GBP.

On the other hand, the Bank of England (BoE) Governor Andrew Bailey said that it was too early to think about rate cuts and that borrowing costs might have to rise again if inflation proved to be more persistent than estimated. The higher for longer rate narrative from the BoE boosts the British Pound (GBP) against its rivals.

About the data, UK composite PMI surges unexpectedly in November, rising to 50.1 in November versus 48.7 prior, above the market consensus of 48.7. Additionally, the Manufacturing PMI climbed to 46.7 from 44.8 previously and the Services PMI grew to 50.5 from 49.5 in the previous reading.

Moving on, market players will monitor the German growth numbers for Q3 and the IFO Survey due later on Friday. Also, the European Central Bank (ECB) President Christine Lagarde and ECB Vice President Luis De Guindos are set to speak, but no surprise is expected from the event.